Forex Charts – Use This Combination and Watch your Profits Soar

If you are using technical analysis and forex Charts, then using the simple combination below, will help you catch the really big trends that yield the big profits and make your profits soar.

Let’s look at this combination on Forex charts and how to turn it into profit.

We are going to look at a 3 step process that anyone can incorporate in their forex strategy that can make it more successful.

1. The weekly trend

Very few forex traders look at the weekly charts, but the weekly chart shows you the longer term trends and effectively separates out the “wood from the trees”, so you can see the important trends.

When looking at the weekly chart you simply need to look for valid support and resistance.

By valid – we mean areas of support that are considered important by the market and have been tested several times in different time frames.

2. The daily chart

Look for the points above, to be in synch with the daily chart, so the same important price levels are lining up on both charts.

Note:

If you have support and resistance that is valid then chances are there are stops behind these levels and trend following systems waiting to kick in if these levels are broken, so the break will continue and a new trend develop.

When these breaks occur they tend to move quickly and they don’t retrace much, so you need to be prepared to buy the break and miss the first part of the move.

Don’t try and anticipate and get in anyway – this won’t work!

A breakout is only valid after it occurs and if a level has been tested then of course it can hold as well, so you need to trade on confirmation only.

3. Getting confirmation

The way to see if a break is going to continue or reverse is to look at price momentum.

There are lots of momentum indicators to look at but two that work well in combination are the Relative Strength Index RSI and the stochastic.

Watch for a rising RSI and for the stochastic lines to pointing in the direction of the break if they have crossed with bullish or bearish divergence just before, all the better.

If you don’t know how to use these indicators – they are an essential part of your forex education!

There easy to learn and apply, so check our other articles.

The biggest profits from the really big moves

If you follow the above tips you will tap into the really big profits from the big moves – they don’t occur often just a few times a year, but these are the trends that yield the biggest profits and the lowest risk.

Most traders don’t do this and most traders don’t win!

Most traders hate buying breakouts, as they think they have missed the first part of the move and want to wait for the pullback to get a better price – but on valid breaks prices move quickly and you need to be in
as prices wont come back quickly and you will never get a better price.

If you can buy or sell breakouts, keep in mind they normally pile up bigprofits so the fact you have missed a little bit of the intial move is fine there is plenty more to come and of course it is missing this bit that gives you the odds in your favor.

Watch your profits soar

The majority of currency traders can’t psychologically buy or sell breakouts, but the majority don’t win – so dont let that worry you - join the winning elite who can and do make huge profits.

If you incorporate the above in your forex trading, it can lead you to currency trading success and really help your profits soar.